Evercore Partners Inc. Chief Executive Officer Ralph Schlosstein said the Volcker rule, while “well-intended,” will increase costs for investors and companies.
“Its intent is to reduce risk in commercial banking and investment banking,” Schlosstein said today in a Bloomberg Television interview with Betty Liu. “But the line between proprietary trading and market-making is almost impossible to draw.”
The biggest U.S. banks are grappling with an overhaul of the financial system through the Dodd-Frank Act and the so-called Volcker rule, named for former Federal Reserve Chairman Paul Volcker. The rule, which takes effect this year, will limit banks from trading on their own behalf and from investing in private-equity and hedge funds.
“You wind up with this incredibly complex regulation with incredibly complex enforcement, all of which will really increase costs for investors and for companies in the U.S.,” Schlosstein said.
Congress included the Volcker rule in the Dodd-Frank Act, leaving the specifics of implementation to regulators. Yesterday was the deadline for comments on guidelines proposed by the Fed and other bank supervisors on how the rule would be put in place.